Hyundai Motor, Foreign Investor Ratio Hits Lowest Since Financial Crisis

[Asia Economy Reporter Song Hwajeong] As foreign investors continue to sell Hyundai Motor Company shares, the foreign ownership ratio has fallen to its lowest level since the financial crisis.

According to the Korea Exchange on the 22nd, as of the previous day's closing price, Hyundai Motor's foreign ownership ratio stood at 34.86%. The foreign ownership ratio, which was in the 44% range a year ago, was 39.85% at the beginning of the year, recovered to the 40% range in February, but has since continuously declined to the lowest level in 10 years.

Im Eunyoung, a researcher at Samsung Securities, said, "Hyundai Motor's foreign ownership ratio is at its lowest level since the global financial crisis," adding, "It sharply declined starting from the 2017 China Terminal High Altitude Area Defense (THAAD) incident, decreasing by 11 percentage points over three years." Hyundai Motor's foreign ownership ratio showed a more pronounced decline compared to Kia Motors and Hyundai Mobis. Over three years, Hyundai Mobis fell by 2 percentage points, while Kia Motors actually rose by 1.5 percentage points.

Despite a rebound in the market, the stock price is struggling due to foreign selling. As of 10:10 AM on the day, Hyundai Motor was down 3.74% (3,500 KRW) from the previous day, trading at 90,000 KRW. This marks three consecutive days of weakness, with foreigners selling Hyundai Motor shares for four consecutive days.

The continued foreign selling is analyzed to be due to the perception that Hyundai Motor is strong in emerging markets. Last year, Hyundai Motor's sales proportion in emerging countries was 50%, a higher level compared to competitors. Researcher Im explained, "Since the financial crisis, Hyundai Motor's growth story has been the motorization of emerging markets centered on China," adding, "However, demand for automobiles in emerging countries has been declining since peaking in 2017." In particular, the COVID-19 pandemic is expected to further shrink automobile demand in emerging countries.

The decline in earnings due to COVID-19 is also inevitable. According to financial information firm FnGuide, Hyundai Motor's consensus operating profit for the first quarter of this year is expected to be 712.6 billion KRW, a 13.61% decrease compared to the same period last year. The operating profit forecast for the second quarter is 704.1 billion KRW, down 43.11%. Lee Sanghyun, a researcher at IBK Investment & Securities, said, "Global automotive industry demand fell by 24% in the first quarter, and Hyundai Motor's wholesale and retail sales decreased by 13% and 18%, respectively," adding, "Although some overseas factories resumed operations in April, social distancing measures have been extended until May in some regions, so the demand decline in the second quarter is likely to worsen compared to the first quarter."

To recover the stock price, expanding market share in advanced markets is necessary. Researcher Im said, "With COVID-19, the sharp drop in oil prices, and de-globalization overlapping, demand in emerging markets will be difficult to recover for a long time," adding, "To overcome the crisis, it is necessary to level up by expanding market share in advanced markets, led by Genesis and others."

This content was produced with the assistance of AI translation services.